The reason the AIG bonuses are upsetting isn’t the amount of the bonuses–although the bonuses are larger than the entire National Endowment for the Arts budget–it’s the complete impotence of and cooptation of the government by the financial sector (yes, we need banks and a financial sector, but they are means, not ends). So I’m thrilled to read this about Treasury Secretary Geithner’s chief of staff:

Obama noted that he was quickly developing policies to prevent future AIG-like catastrophes…. Noting that he and Rep. Barney Frank (D-Mass.) had each introduced legislation on this front in 2007, Obama declared that “there were some people who attacked us, saying government has no business doing that.”

One of Obama’s opponents at that time was Mark Patterson, a lobbyist then for Goldman Sachs, the investment banking firm, which opposed the Frank-Obama initiative. Yet Patterson is now chief of staff to Treasury Secretary Timothy Geithner, the embattled point man in the Obama administration’s endeavor to undo the notorious AIG bonuses. That is, a Washington influence-peddler who worked against Obama’s effort to limit excessive corporate pay is now a key member of the Obama administration team that is supposed to contain excessive compensation in the AIG case and in general….

As vice president for government relations at Goldman Sachs, Patterson, who had previously been policy director for Sen. Tom Daschle, handled a wide assortment of financial, banking, patent, energy, and insurance issues. He worked on tribal gaming matters. And he was registered to lobby on credit default swaps and carbon trading. Because of his lobbying activities, Patterson did not meet the tight ethics rules Obama adopted to slow down Washington’s ever-spinning revolving door. His appointment–which was not subject to Senate confirmation–was questioned by White House reporters and criticized by government reform outfits. But the Obama administration granted Patterson a waiver, and the ex-Goldman Sachs lobbyist was able to join Treasury. (Goldman Sachs has been one of the biggest beneficiaries of the federal rescue of AIG; the fallen insurance firm, which has received $170 billion in funds from the Federal Reserve, has used that money to pay Goldman Sachs $6.8 billion.)

The Treasury Deparment is claiming that Patterson recuses himself when he has conflicts-of-interest. So what is left for Patterson to work on?

I keep reading how hard it is for Obama to find qualified people who don’t have conflicts of interest due to lobbying. But it’s actually not that hard: Krugman, Baker, Volcker, and Galbraith wouldn’t have problems. What they really mean is that it’s hard to find someone sympathetic to the Wall Street greedheads who lacks conflicts-of-interest. Go figure.

Comments

Have you read the letter from the AIG executive over at the NYT? If I’m reading it correctly, his salary was $1 and most of his pay from AIG came in the form of the “bonus.” I think most wall street types are vastly overpaid, but to call these bonuses is somewhat dishonest, and distracts from the larger issue. We should be looking at the TOTAL compensation, rather than focusing on the bonuses.

Sorry, but you cannot impeach a cabinet officer. That was what the whole impeachment effort against Andrew Johnson was about. It has since been established that a cabinet officer serves at the pleasure of the President and Congress has no authority to remove him.